Weekly Market Update - 20 May 2024
Boeing
Boeing has four weeks to convince the US not to prosecute the company after finding it breached a 2021 agreement protecting it from criminal charges following two fatal crashes. The company faces significant scrutiny by the Justice Department after a string of safety failures. But the government can go only so far in handcuffing the nation’s leading plane maker and key defense contractor. “If there is any company in the US that’s too big to fail, it’s the Boeing Company,” said Samuel Buell of the Duke University School of Law. “It is unimaginable that our economy could continue to function without our largest airplane manufacturer.” If it can’t change prosecutors’ minds next month, Boeing will likely have to plead guilty to a criminal charge. Officials have given Boeing until June 13 to provide its response. The department has until July 7 to determine what kind of punishment it will seek against the company.
Source: Bloomberg
Foreign Flows
China is set to switch off a live feed of foreign flows for stocks as early as today, the latest policy move to shore up confidence by removing a potential source of negative data. The Shanghai and Shenzhen exchanges plan to cease displaying real-time figures on purchases or sales of local stocks through trading links with Hong Kong. Instead, the two bourses will provide the turnover details on a daily basis, along with the 10 most-traded stocks via the northbound channel. Intraday readings showing foreign outflows were partly blamed for worsening sentiment among Chinese retail investors during several episodes of intense selloffs over the past year.
Source: Bloomberg
Unfairly Subsidized
The US Commerce Department opened an investigation into allegations that solar cells and panels imported from four Southeast Asian countries are being unfairly subsidized and priced below their production costs. Companies making solar equipment in the US formally sought the probe last month, saying tariffs are needed to counteract unfair practices by rivals in Cambodia, Malaysia, Thailand and Vietnam. The case will play out against the backdrop of a presidential campaign, with both Joe Biden and Donald Trump casting themselves as defenders of US manufacturing. The investigation will proceed on parallel tracks, with the Commerce Department assessing whether dumping or subsidizing is happening. Depending on the findings, importers could be forced to make cash deposits on affected imports based on estimated duties.
Source: Bloomberg